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Does a Business Loan Show on My Personal Credit Report ?

If you’re a small business owner, you may be wondering whether a business loan will show up on your personal credit report. The answer is yes, a business loan can show up on your personal credit report. That’s because the loan is technically a personal guarantee, meaning you are personally liable for the loan if your business cannot repay it. ‍

Melanie Laurent

Let’s take a closer look at how a business loan shows up on your personal credit report and how it can affect your personal credit score. 

What is a Business Loan? 

A business loan is a type of financing specifically designed for businesses. It’s usually provided by a bank, credit union, or other lender and is secured against the business’s assets. This means that if the business fails to repay the loan, the lender can seize the assets as repayment. 

Business loans are typically used to finance a business’s growth, such as to purchase new equipment, hire more employees, launch a marketing campaign, or open a new location. Borrowers generally need to have a good credit score and a solid business plan in order to qualify for a business loan. 

How Does a Business Loan Appear on My Personal Credit Report? 

A business loan will appear on your personal credit report in two ways. First, the business loan will appear as a trade line. This is basically a record of the loan, including the amount borrowed, the terms of the loan, and the lender’s contact information. 

Second, if you have personally guaranteed the loan, then it will also appear as a personal debt on your credit report. This means that if your business fails to repay the loan, then the lender can come after you personally for repayment. 

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How Does a Business Loan Affect My Personal Credit Score? 

A business loan can affect your personal credit score in two ways. First, the loan will be included in your credit utilization ratio, which is the ratio of your total credit card balances to your total credit limits. The higher your credit utilization ratio, the more it will negatively affect your credit score. 

Second, if you have personally guaranteed the loan, then it will also be included in your debt-to-income ratio. This is the ratio of your total monthly debt payments to your gross monthly income. The higher your debt-to-income ratio, the more it will negatively affect your credit score. 

So, to answer the question, yes, a business loan can show up on your personal credit report. It will appear as both a trade line and a personal debt, and it can affect your personal credit score. That’s why it’s important to make sure that you understand all the terms of the loan before you sign the paperwork.

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